(Reuters) – Hedge fund Citadel on Tuesday said it bought a 5.3% stake in Western Alliance Bancorporation, sending a strong signal of confidence as the company was swept up in growing fears of a broader financial crisis after two other banks were seized.
Western Alliance’s share price, which had tumbled on Monday, shot higher on Tuesday, rising as much as 43% shortly after the opening of trading. Earlier in the morning, its shares had been briefly halted for trading.
Citadel, run by billionaire Ken Griffin, earned $16 billion in profits for investors last year and its trades are closely watched by markets for signs of trends. Last year’s returns made Citadel the most successful hedge fund ever.
A Citadel spokesman declined to comment beyond the regulatory filing in which the investment was detailed.
Western Alliance was one of a number of banks caught in a crippling sell-off since last week when regulators shut down startup-focused bank SVB Financial Group that triggered worries of a contagion and rippled across financial markets. Signature Bank was also shut down by regulators.
Earlier on Tuesday, CNBC reported that Ron Baron said he “modestly increased” his position in broker Charles Schwab to take advantage of a double-digit sell-off.
(Reporting by Svea Herbst-Bayliss in Boston, Mehnaz Yasmin in Bengaluru; editing by Uttaresh Venkateshwaran)
